Pakistan on Tuesday received one billion dollars from the United Arab Emirates (UAE) that would increase the country’s reserves held by the central bank to above $9 billion.
Spokesperson to the ministry of finance Dr Khaqan Hassan Najeeb has said that government of Pakistan’s multipronged strategy and credible measures for financing arrangements are yielding results. He further said that $1 billion deposit received from UAE would help in further balancing payment stability and ensuring smooth international foreign payment obligations. Meanwhile, it would shore up foreign exchange reserves, he said on his social media account.
The one billion dollars received from the UAE would help in taking the foreign exchange reserves held by the State Bank of Pakistan to $9.116 billion. Meanwhile, the country’s overall foreign exchange reserves, which also included reserves of the commercial banks, would rise to $15.956 billion. Sources in the ministry of finance informed that the government would shortly receive another one billion from UAE.
The agreement for the placement of the second tranche of $ 2.0 billion by Abu Dhabi Fund for Development (ADFD) with the State Bank of Pakistan (SBP) has been recently signed between the SBP and the ADFD. The ADFD in December had announced a deposit of $3 billion in the SBP’s account to enhance liquidity and monetary reserves of foreign currency at the bank on the request of the government of Pakistan. The first tranche of US$ 1.0 billion had already been received by SBP in January 2019.
Economic experts believed that inflow of dollars would provide some leeway to the balance of payments. The country’s current account deficit had narrowed by 16.79 percent to $8.42 billion in the first seven months (July-January) of the ongoing fiscal year. The deficit had contracted by efforts to curtail imports of goods and services. The SBP sees current account deficit to narrow to 4.5 to 5.5 percent of gross domestic product in FY2019 compared to 6.1 percent during the last fiscal year.
Prior to the UAE, Saudi Arabia had also announced a $6 billion package for Pakistan, which included placing $3 billion cash deposits in the account of State Bank of Pakistan. Saudi Arabia had already deposited $3 billion in the SBP account for a one year period. In addition, KSA would also provide a one-year deferred payment facility for the import of oil, worth up to $3 billion. The loan had been made available at 3.18 percent interest.